02 b grover cs 2001 strat it algnmt

2001 � Twenty-Second International Conference on Information Systems 1

STRATEGIC IT ALIGNMENT: A MODELFOR COMPETITIVE ADVANTAGE

Grover S. KearnsCollege of Business

University of South Florida St. [email protected]

Albert L. LedererGatton College of Business and Economics

University of [email protected]

Abstract

This study examines how and why strategic IT alignment can be used to create competitive advantage and towhat extent information intensity affects this process. A model is tested to examine how and why strategic ITalignment can produce enhanced organizational knowledge that yields competitive advantage. The modeldifferentiates between alignment between the business plan and IT plan (BP-ITP alignment) and alignmentbetween the IT plan and business plan (ITP-BP alignment). Results support six of the eight hypotheses andconclude that information intensity is an important antecedent to strategic IT alignment, that strategic ITalignment is best explained by multiple constructs which operationalize both process and content measures,and that ITP-BP, but not BP-ITP, alignment is significantly related to the use of IT for competitive advantage.

Keywords: Strategic IT planning, alignment of IT plans with business plans, competitive advantage.

ISRL Categories: AF0401.01, EF0201, EF04, EL0302, AI0104, GA01.

INTRODUCTION

Executives widely acknowledge that information technology investment can produce competitive advantage and that strategicIT alignment is an important predictor of IT investment profitability (Brown and Gatian 1995; Henderson and Venkatraman 1993);particularly so for information intense firms (Sabherwal and King 1991). Why alignment is important to successful investmentsis little understood.

In a recent London School of Economics survey, CEOs and IT executives stated that over half of their company�s IT investmentswere aimed at gaining a competitive advantage (Compass Group 1999). In a follow-up survey, CEOs revealed growingexpectations regarding IT profitability despite the failure of so many investments. CEOs were generally positive and rated IT asthe firm�s top strategic tool. Furthermore, the CEOs viewed the source of competitive advantage as superior managementprocesses and knowledge, not technology per se.

Identifying and cultivating essential organizational processes can improve profitability and result in a competitive organizationalasset (Ferrier et al. 1999; Tallon et al. 2000). To achieve success, firms have �had to realign not merely their IT strategy but alsotheir business strategy and to maintain close alignment between the two� (Burns and Szeto 2000, p. 206).

MIS research has noted that organizational learning processes are increasingly important in identifying successful IT-based invest-ments and creating IT enabled change (Markus and Benjamin 1997; Willcocks et al. 1997). Total management involvementempowers employees in regard to IT related decisions. This sharing of knowledge may be the key to sustainable competitiveadvantage because it leads to more focused IT strategies (Tallon et al. 2000). However, �knowledge by its nature is highlypersonal and extremely difficult to transfer with richness as complete as the original holder of the knowledge understands it� (Lee2000, p. 34).

mailto:[email protected]

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Kearns & Lederer/Strategic IT Alignment

2 2001 � Twenty-Second International Conference on Information Systems

Alignment of the IT Plan with

the Business Plan

The CIO Participates in

Business Planning

Information Intensity of the

Value Chain

IT is Used for Competitive Advantage

Alignment of the Business Planwith the IT Plan

The CEO Participates in IT

Planning

F1

F2

F3 F5

F4

F6H1

H2

H3

H6

H4

H5

H7

H8

where F* is the latent factor or construct

Alignment of the IT Plan with

the Business Plan

The CIO Participates in

Business Planning

Information Intensity of the

Value Chain

IT is Used for Competitive Advantage

Alignment of the Business Planwith the IT Plan

The CEO Participates in IT

Planning

F1

F2

F3 F5

F4

F6H1

H2

H3

H6

H4

H5

H7

H8

where F* is the latent factor or construct

Figure 1. Model of Strategic IS Alignment

This paper seeks to (1) examine the influence of information intensity upon the strategic IT alignment process and (2) assess howand why strategic IT alignment can yield competitive advantage.

THE RESEARCH MODEL AND HYPOTHESES

Strategic IT Alignment and Competitive Advantage

Organizational competitiveness is dependent upon the use of organizational learning processes that can uncover dispersedknowledge capable of rendering superior organizational performance (Hunt 1999). While executives are aware that many businesssuccesses are the result of fortuitous circumstances, they would prefer to have a future controlled by experienced judgment ratherthan mere chance.

Strategic IT alignment is an organizational learning process that combines business and IT knowledge in order to support businessobjectives (Reich and Benbasat 1996). It can positively affect organizational profitability by creating superior strategies thatachieve a competitive advantage. Alignment also includes the set of explicit outcomes contained in the business plan and IT plan(Earl 1993; Chan et al. 1997).

The study model in Figure 1 consists of six constructs, labeled F1 through F6, connected by paths signifying theorized causalrelationships. A discussion of the model constructs and study hypotheses follows.

Information Intensity and Planning Participation

In this study, information intensity (F1) is defined as the extensiveness of the information component in value chain activities andis measured by the level of accuracy, frequency of updates, and the magnitude and extent of information in operations (Buschet al. 1991; Porter and Millar 1985). Because of its value (Hunt 1999), information intense firms cultivate processes ofinformation acquisition, assimilation, and conversion (Nambisan et al. 1999) and are more likely to use IT in a strategic role(Sabherwal and King 1991).

Planning participation refers to the collaborative participation of the CIO in business planning and the CEO in IT planning. CIOparticipation is measured by participation in planning meetings, formulation of business goals, frequent access to the CEO, andregular informal contacts with other members of top management (Lederer and Mendelow 1989; Raghunathan and Raghunathan1989; Sambamurthy and Zmud 1999). CEO participation is measured by regular contacts with the CIO, involvement on an ITsteering committee, knowledge about competitor's use of IT, knowledge about IT opportunities within the firm, and treatmentof IT as a strategic resource rather than a cost (Jarvenpaa and Ives 1991; Lederer and Mendelow 1988).



CIO and CEO collaboration in business/IT planning promotes organizational learning, results in more effective utilization oforganizational knowledge (Bharadwaj 2000), and positions firms to create superior IT-based strategies (Johnston and Carrico1988). Hence, the following hypotheses:

H1: Information intensity is positively associated with the CIO�s participation in business planning.

H2: Information intensity is positively associated with the CEO�s participation in IT planning.

CIO Participation in Business Planning and Alignment

CIOs who participate in business planning (F2), are more likely to understand business objectives and to link IT strategies closelywith organizational strategies (Jones et al. 1995). CIO participation in organizational planning furthers the assimilation oftechnical and business knowledge and supports the goals of the business by creating alignment between IT and business strategies(Andreau and Ciborra 1996).

We define strategic IT alignment as two sets of outcomes: the alignment of the IT plan with the business plan (ITP-BP alignment)and the alignment of the business plan with the IT plan (BP-ITP alignment). ITP-BP alignment occurs when the business plangoals and strategies are reflected in the IT plan goals and strategies, and when the ITP reflects external environmental forces (King1978; Teo and King 1997). BP-ITP alignment occurs when the business plan contains realistic expectations about IT performance,utilizes the strategic capability of IT, and references specific information systems and technologies (Goldsmith 1991; Lederer andMendelow 1989; Sabherwal 1989).

Information intense firms cannot exclude CIOs from the planning process. Because of the potential that information has forenabling business initiatives, it is important that top management understands �the critical importance of establishing appropriateIT decision rights to direct and coordinate an organization�s effective use of and exploitation of IT� (Sambamurthy and Zmud1999, p. 282). Hence, the following hypotheses:

H3: The CIO�s participation in business planning is positively associated with the alignment of the IT plan withthe business plan (ITP-BP alignment).

H4: The CIO�s participation in business planning is positively associated with the alignment of the businessplan with the IT plan (BP-ITP alignment).

CEO Participation in IT Planning and Alignment

CIOs may envision IT-based strategies that are difficult for other managers to comprehend (Nambisan et al. 1999). When theCEO participates in IT planning (F3), however, other managers are motivated to become familiar with and make innovative useof IT (Jarvenpaa and Ives 1991). CEOs have the power to set �clear examples for their colleagues regarding the need to givequality time to IT (Earl and Feeny 2000, p. 17).� When management participates in IT planning, it fosters an appreciation forwhat is �meaningful and relevant� and promotes the combining of business with IT knowledge (Hann and Weber 1996).Furthermore, CEO participation is an effective mechanism for breaking down barriers to organizational learning imposed byhierarchical structures (Brown 1999), and is directly related to the quality of the IT plan outcomes (Byrd et al. 1995).Management's perspective on IT can impact the extent of process change undertaken (Broadbent et al. Thus, collaborativeparticipation can support the alignment of IT goals and strategies with business goals and strategies.

Operating alone, CIOs are likely to craft inferior strategies because they do not understand the exact nature of how firm resourcescan create a competitive advantage (Schoemaker and Amit 1994; Tallon et al. 2000). When other managers participatecollaboratively, business strategies will more likely reflect specific information technologies, have rational expectations of IT,and use IT strategically, which accomplished BP-ITP alignment. Hence, the following hypotheses:

H5: The CEO�s participation in IT planning is positively associated with the alignment of the IT plan with thebusiness plan (ITP-BP alignment).

H6: The CEO�s participation in IT planning is positively associated with the alignment of the business planwith the IT plan (BP-ITP alignment).



Alignment and Competitive Advantage

In this study, the dependent variable�IT is used for competitive advantage�was operationalized by strategic IT applications thatdirectly influence and defend against the five competitive forces (Porter 1980). Superior strategies use IT to lower product costs,create product differentiation, increase customer switching costs, combat competitors, and raise market entry barriers (Parsons1983; Porter and Millar 1985).

Organizational knowledge allows some firms to achieve a competitive advantage and explains why firms treat organizationallearning processes as valuable assets (Hunt 1999, 2000). Explicit articulation of this knowledge is embodied in the alignmentoutcomes. ITP-BP alignment supports the use of IT for competitive advantage by the more accurate mapping of IT strategies tobusiness strategies.

BP-ITP alignment, accomplished by the explicit declaration of IT within the business plan, supports the use of IT for competitiveadvantage because explicit articulation IT in business strategies improves implementation. This requires managers to be moreknowledgeable of IT opportunities, and can lead to an IT-based competitive advantage because of heightened internal consistencyand improved implementation. Hence, the following hypotheses:

H7: Alignment of the IT plan with the business plan is positively associated with the use of IT to providecompetitive advantage.

H8: Alignment of the business plan with the IT plan is positively associated with the use of IT to provide acompetitive advantage.

RESEARCH METHODOLOGY

The Research Instrument

This study used a questionnaire that contained items measuring the six constructs and general demographics. Survey questionsused a seven-point Likert-type scale anchored at strongly disagree (1) and strongly agree (7). These questions appear in Table 1.

Instrument refinement was accomplished using four MIS professors and eight executives from four different industries.Comments from the pilot were incorporated into the final instrument.

Using a random sample of 1,200 companies including all industries except government and non-profit institutions, surveys weresent directly to CIOs of companies with at least $75 million in annual revenues. The mailing list was purchased from acommercial firm that offered a large database of U.S. companies identifiable along several attributes that had been updated withinthe past 18 months. Participants were guaranteed confidentiality of responses and were offered an executive level summary ofresponses as an incentive.

This study is based on the perceptions of a single informant. However, CIOs were advised that results were completelyanonymous; thus, any motivation for exaggeration and self-promotion was reduced. When single informants are used, it isnecessary to select the most experienced and knowledgeable person (Huber and Power 1985). Surveys were sent directly to CIOswho, by virtue of their position, have been exposed to the views of other senior executives as well as those of peers andsubordinates.

Survey Results

Over 150 of the surveys were returned stating that the addressee had moved and a forwarding address was unavailable. (This mayreflect high CIO turnover rates.) A total of 161 usable surveys were returned over a six week period. Direct contact with over400 of the non-responding companies revealed that 22% of the surveys had been intercepted by the CIO�s secretary and discardedin accordance with company policy. Since these surveys did not reach the intended informer, they should not be included(Armstrong and Overton 1977). The unadjusted response rate was 13.4%. Adjusting for the 150 returned surveys plus 264discarded (22%), the adjusted response rate would be 20.5%.

Respondents had an average of 5.1 years of college education and 20 years of experience within the IT area. Table 2 presentsa list of industries surveyed.



Non-Response Bias

Non-response bias was investigated by comparing the average values for each of the constructs for weekly time intervals in whichthe completed surveys were received (Armstrong and Overton 1977). T-tests of the mean differences for each of the constructsfailed to reveal any significant difference or trends over the six week period. Results suggested the absence of non-response bias.

Table 1. Study Constructs and Survey Questions

Constructs and Survey Questions(F1) Information Intensity of the Value Chain (Adapted from Teo 1994)V1. Information is used to a great extent in our production or service operations.V2. Information used in our production or service operations is frequently updated.V3. Information used in our production or service operations is usually accurate.V4. Many steps in our production or service operations require the frequent use of information.

(F2) The CIO Participates in Business Planning The IT executive...

V5, regularly attends business planning meetings.V6. contributes to the formulation of business goals.V7. has regular informal contacts with top management.V8. has easy access to the CEO.V9. has frequent contacts with the CEO.

(F3) The CEO Participates in IT Planning (Adapted from Jarvenpaa and Ives 1991)The CEO...

V10. plays an important role in the corporate IS steering committee.V11. becomes knowledgeable about competitors� use of IS.V12. has frequent informal contacts with IS management.V13. becomes knowledgeable about IS opportunities within the firm.V14. regards spending on IS as strategic investments rather than expenses to be controlled.

(F4) Alignment of the IT Plan with the Business Plan V15. The IS Plan reflects the business plan mission.V16. The IS Plan reflects the business plan goals.V17. The IS Plan supports the business strategies.V18. The IS Plan recognizes external business environment forces.V20. The IS Plan reflects the business plan resource constraints.

(F5) Alignment of the Business Plan with the IT Plan V19. The Business Plan refers to the IS Plan.V20. The Business Plan refers to specific IS applications.V21. The Business Plan refers to specific information technologies.V22. The Business Plan utilizes the strategic capability of IS.V23. The Business Plan contains reasonable expectations of IS.

(F6) IT is Used to Create a Competitive Advantage With respect to our company�s core products or services and major customers and suppliers, IS has been usedto...

V25. provide advantages such as lower costs or product differentiation.V26. make it more costly for our customers to change suppliers.V27. establish electronic links with suppliers or customers.V28. create barriers to keep competitors from entering our markets.V29. influence the buyer�s decision to switch to our products.

Constructs were not identified in the survey. They have been added in this table for the reader�s convenience.



Table 2. Survey Response by Industry

Industry Frequency Industry FrequencyManufacturingWholesale/RetailUtilities and CommunicationsConstructionFinancePublishing/NewsComputersConsumer ProductsPetroleumAerospaceAuto/Heavy Industry

502420

88754322

Health CareLegalRestaurantsTransportationAgricultureEducationHotelsInsuranceMiningPharmaceuticalsOther

2222111111

14total responses 161

DATA ANALYSIS

Study data were analyzed using structural equation modeling (SEM) in which parameters are estimated by minimizing thediscrepancy between the model implied covariance matrix and the observed covariance matrix.

The Measurement Model

Modifications were made to the original measurement model in order to achieve a proper fit. Respecification omitted threemultidimensional variables�V8, V9, and V23�to simplify evaluation (Anderson et al. 1987, MacCallum et al. 1992).Standardized factor loadings and measures of reliability and validity for the final measurement model are presented in Table 3.All of the six Cronbach alpha coefficients and composite reliability indices exceed the recommended minimum of .60.Standardized factor loadings are generally high (only one is less than .60) and significant (t > 2.96) for all measures.

Reliability and Validity

Internal consistency of the indicator variables was established using Cronbach's alpha and the composite reliability index (Fornelland Larcker 1981). Goodness-of-fit was measured by multiple indices to negate bias associated with a single index. The indicesused for this study were the Normed Fit Index, the Non-Normed Fit Index, the Comparative Fit Index, the Average AbsoluteStandardized Residual, the Satorra-Bentler CFI, the Standardized Root Mean Squared Error, and the ratio of chi-square to degreesof freedom (P2/df). Table 4 presents goodness-of-fit indices for the final measurement model, which were generally within therecommended ranges (Harvey et al. 1985).

Evidence of construct validity was provided by measures for content validity, convergent validity, and discriminant validity.Content validity was based upon the pilot test (Cronbach 1971). Convergent validity was established by the high factor loadingsand high levels of significance for the indicator variables. Evidence for discriminant validity was established by three tests.

First, the variance-extracted estimates in Table 3 revealed that five of the six constructs explain 50% or more of the variance. Thisdemonstrates the ability of the measures to discriminate between constructs.

Second, a chi-square difference test was conducted to assess discriminant validity between theoretically related constructs thatare highly correlated to ensure that they are really measuring different phenomena. Factor correlations of three sets of constructsthat had theoretical associations were sufficiently high to question whether or not combining each set of measures into a singleconstruct would provide about the same results with a more parsimonious model. Given the theoretical association of theirunderlying constructs, these were sufficiently high to warrant attention. In three separate tests, the correlation between associatedfactors was set to 1. For each test, the P2 difference exceeded the critical P2 value (p = .001) indicating that each construct indeedmeasures a unique phenomenon.



Table 3. Properties of the Final Measurement Model

Construct and IndicatorsStandardized

Loading t-value Reliability

VarianceExtractedEstimate

Value Chain (F1) .88a .81 b .51V1V2V3V4

.81

.93

.64

.76

11.5513.99

8.5211.21

.65c

.83

.41

.57CIO Participation (F2) .92 .83 .67

V5V6V7

.91

.98

.66

14.2916.29

9.06

.83

.96

.44CEO Participation (F3) .93 .82 .54

V10V11V12V13V14

.70

.84

.78

.91

.85

9.6212.6311.2514.4012.82

.49

.71

.61

.83

.72ITP�BP Alignment (F4) .96 .88 .59

V15V16V17V18V19

.94

.97

.91

.71

.61

15.4016.4014.59

9.998.30

.88

.91

.83

.50

.38BP�ITP Alignment (F5) .95 .85 .59

V20V21V22V24

.89

.93

.90

.68

13.9814.8713.84

9.39

.80

.86

.79

.47Competitive Advantage (F6) .76 .67 .34

V25V26V27V28V29

.75

.48

.61

.67

.61

9.925.797.618.627.58

.56

.23

.37

.45

.37aCronbach Alpha Coefficient bComposite Reliability cIndicator Reliability

Table 4. Final Measurement Model: Goodness of Fit Indices

TestStatistic

StudyValue

PrescribedValue

Average Absolute Standardized Residual .04 < 1.0Chi-Square 437.72degrees of freedom (df) 284P2/df ratio 1.54 < 2.0Normed Fit Index .86 $ .90Non-Normed Fit Index .94 $ .90Comparative Fit Index .95 $ .90



H5.158

F4Alignment of

the IS Plan with the Business Plan

F2The CIO

Participates in Business Planning

F1Information

Intensity of theValue Chain

F6IT is Used for Competitive Advantage

F5Alignment of

the Business Planwith the IT Plan

F3The CEO

Participates in IT Planning

H3.51*** H7

.62***H1.35*** H4

.34***

H2.34*** H8

.14H6.39***

*, **, *** significance level of t-values is p < .05, .01, and .001 respectively.Dependent variable R2 = .50.

H5.158

F4Alignment of

the IS Plan with the Business Plan

F2The CIO

Participates in Business Planning

F1Information

Intensity of theValue Chain

F6IT is Used for Competitive Advantage

F5Alignment of

the Business Planwith the IT Plan

F3The CEO

Participates in IT Planning

H3.51*** H7

.62***H1.35*** H4

.34***

H2.34*** H8

.14H6.39***

*, **, *** significance level of t-values is p < .05, .01, and .001 respectively.Dependent variable R2 = .50.

Third, a confidence interval test was performed on the same three sets of factors. For each test, the confidence intervals did notinclude the value of 1.0, suggesting it is statistically unlikely that the population correlation between the factors is 1.0.

The Structural Model

A structural model was specified based on the final measurement model and the hypothesized paths. Initial fit indices wereunsatisfactory. The Lagrange multiplier test identified several pairs of disturbance terms and error terms that, if allowed to covary,would improve model fit. Correlated errors indicate that the variation in the measurements is produced by something other thanor in addition to the underlying theoretical concepts and random error. Allowing these terms to covary did not detract from thetheoretical meaning of the model. Specifically, the three pairs of terms were the error terms associated with the variables V15through V16 and V26 through V28 and the disturbance terms associated with the constructs F2 and F3.

RESULTS

The final revised research model with path coefficients appears in Figure 2. The model accounts for approximately half of thevariation in the dependent variable (R2 = .50). Thus, the model is reasonably successful in positively relating alignment toorganizational performance.

Table 5 shows that the goodness-of-fit indices in the final structural model were well within the prescribed range. Table 6 showsthat six of the eight hypotheses were supported.

Figure 2. Final Structural Model with Path Coefficients

DISCUSSION

The first study goal was to examine the influence of information intensity on alignment processes. Information intensity was foundto positively and significantly influence both the participation of the CIO in business planning (H1) and the participation of theCEO in IT planning (H2).

The second study goal was to assess how and why strategic IT alignment can yield competitive advantage. Four constructs,composed of process and outcome measures, represented the alignment mechanism. Participation by the CIO in business planningwas strongly associated with both ITP-BP (H3) and BP-ITP (H4). Thus, we have evidence consistent with the expectation thatthe CIO's increased participation improves alignment of IT strategies with business strategies and promotes the identification ofexplicit information systems and technologies in business strategies.



Table 5. Final Structural Model: Goodness of Fit Indices

TestStatistic

StudyValue

PrescribedValue

Average Absolute Standardized Residual .06 < .10Chi-Square 440.59degrees of freedom 287P2/df 1.54 < 2.0Non-Normed Fit Index .94 $ .90Comparative Fit Index .95 $ .90Satorra-Bentler CFI .96 $ .90Standardized Root Mean Squared Error .05 < 1.0

Table 6. Support for Study Hypotheses

Hypothesis SupportedBeta

(significance) T-valueH1: Information intensity of the value chain is positively associatedwith the CIO�s participation in business planning.

H2: Information intensity of the value chain is positively associatedwith the CEO�s participation in IT planning.

H3: The CIO�s participation in business planning is positivelyassociated with the alignment of the IT plan with the business plan.

H4: The CIO�s participation in business planning is positivelyassociated with the alignment of the business plan with the IT plan.

H5: The CEO�s participation in IT planning is positively associatedwith the alignment of the IS plan with the business plan.

H6: The CEO�s participation in IT planning is positively associatedwith the alignment of the business plan with the IT plan.

H7: Alignment of the IT plan with the business plan is positivelyassociated with the use of IT to provide competitive advantage.

H8: Alignment of the business plan with the IT plan is positivelyassociated with the use of IT to provide competitive advantage.

Yes

Yes

Yes

Yes

No

Yes

Yes

No

.35 (p < .001)

.34 (p < .001)

.51 (p < .001)

.34 (p < .001)

.16 (p < .10)

.39 (p < .001)

.62 (p < .001)

.14 (p < .15)

4.25

4.01

5.39

3.70

1.69

4.15

5.72

1.42

Also, participation by the CEO in IT planning was strongly associated with BP-ITP (H5). Thus, we have evidence consistent withthe expectation that when the CEO participates in IT planning, explicit information systems and technologies will more likelybe identified in business strategies. Why, then, was a significant relationship between the CEO's participation and ITP-BP (H6)not found?

Part of the answer may lie in the responses for the constructs for CIO participation and CEO participation, 5.1 and 4.4respectively. The importance of the CEO's participation to the successful implementation of IT applications has been noted(DeLone 1988). Limited participation by the CEO in IT management may result from a lack of understanding about IT issuesand IT resources (Jarvenpaa and Ives 1991). With less CEO participation, however, other business executives will less likelyparticipate and the alignment of IT strategies to business strategies will suffer.



Also, it has been noted that many CEOs state that they support the strategic role of IT but, in reality, their actions do not confirmtheir message (Earl and Feeny 2000). In the current research, such behavior might account for the lower means and non-significant relationship between CEO participation and ITP-BP alignment.

Finally, ITP-BP alignment (H7), but not BP-ITP alignment (H8), was positively and significantly related to the use of IT forcompetitive advantage. The lack of a significant relationship between BP-ITP and the use of IT for competitive advantage impliesmissed opportunities: organizations may not be taking advantage of organizational learning by failing to record and disseminatetheir knowledge.

Recently, MIS research has characterized the CEO as being IT-savvy and supportive of IT's strategic role. This study contradictsthat view. Here we see that CEO participation is lukewarm and that strategic IT alignment remains the primary burden of the CIO.

Implications for Researchers

This study shows that the CIO continues to play the stronger role in IT planning and the promotion of explicit reference to IT inthe business plan. The study confirms, as in past empirical research, a strong and significant relationship between ITP-BPalignment and the use of IT for competitive advantage.

Lack of an association between BP-ITP alignment and the use of IT for competitive advantage should inspire researchers. If weaccept the importance of organizational learning, then effective implementation of IT-based business strategies depends upon thespecific reference to IT in the business plan. Clear acknowledgement of IT in business strategies might spur innovation throughCIO and CEO collaboration. Explicit alignment outcomes assist in understanding and implementing strategies.

Implications for Practitioners

Both the process and content items in the multidimensional model of strategic IT alignment have important implications forpractitioners. First, study results indicate that information-intensive firms place increased emphasis on collaboration in businessand IT planning. In order to be competitive, CIOs may wish to focus on and cultivate management processes that combinebusiness and IT knowledge, particularly those routines that allow for the creative exchange of domain knowledge in order toachieve superior strategies.

Second, respondents in this study perceived participation of the CIO in business planning as being important to the content of boththe business plan and the IT plan. Where managers are not IT-literate, CIOs might consider a relationship manager to supportintegration of technical and business knowledge (Nambisan et al. 1999) and increase the efficacy of IT-adoption through anenvironment that encourages �experimentation and exploration with new technologies� (Agarwal and Karahanna 2000, p. 688).

Future Research

Future research could refine and further elucidate this framework by testing new measures or continuing to validate existing ones.Further inquiry is needed to (1) examine the proper role of CEO participation; (2) determine the value of BP-ITP alignment; and(3) increase our understanding of how IT knowledge can best be combined with other domain knowledge.

Validation of these constructs and the use of dual informants in a future instrument would strengthen their reliability.

CONCLUSIONS

This paper makes three important contributions: It contributes to our understanding of both the process and outcome dimensionsof strategic IT alignment; it provides an explanatory framework of the alignment-competitive advantage relationship; and itprovides a new dependent variable, heretofore untested although grounded in MIS theory.

Alignment can be viewed as being composed of multiple process and content measures that represent participation by all areasof management. Evidence suggests that the CIO continues to support the IT planning process and is primarily responsible foridentifying which information systems and technologies will support or enable business strategies.



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